G4S feels more secure after bouncing back into profit

The world’s biggest security firm, G4S, today bounced back from two years of Olympic failures and criminal contract scandals, returning to the black with an £85 million first-half profit.

Signing new deals worth £1.2 billion — including contracts to clear landmines in South Sudan and in Iraq — enabled G4S to turn around the re-stated loss of £94 million it sank to in the same first six months of last year. But chief executive Ashley Almanza, who replaced Nick Buckles last year, warned that there was still “much to be done” to overhaul the business.

The cost of Olympic security failures and work to reform the business have weighed on G4S, which had to repay nearly £110 million to the taxpayer in March, after over-charging the state for tagging criminals who were actually dead, imprisoned or did not exist.

The sprawling firm, which employs almost 620,000 staff in 120 countries, is still under investigation by the Serious Fraud Office for over-charging on that contract, although the Government lifted its ban on G4S winning new state contracts in April.

Still, the impact of that temporary blacklisting, the loss of the tagging contract, plus a reputational hit in this country saw G4S’s revenues in the UK decline by 2% to £790 million in the first six months of the year.

The firm, however, pointed out that it had since won a deal from the Department for Work & Pensions to manage community work placements for the long-term unemployed, and said it wants to “grow the business by competing for new government services.”

However, G4S is still hunting for a permanent boss for its UK business, after Eddie Aston quit in May — the third person in that role to leave in only two years.

Almanza said G4S had sold six divisions in the past year and decided to discontinue another 15, largely loss-making, small businesses.

It is also in talks to sell its US Government Solutions business, which runs sensitive contracts such as mine clearance and has just been awarded a $24 million (£14.3 million) contract to run housing and facilities at the US Navy’s Guantanamo Bay base. A spokesman said the unit is up for sale because, as a non-American company, “the US Government prohibits G4S in having any control or influence over the business”.

Shares rose 4.6p to 264.4p today, leaving the stock within touching distance of its highest price since May 2013 when a profit warning led it to dive nearly 15% from 305.5p.